Tennessee Senate advances nearly $2 billion business tax cut, refund to prevent lawsuit

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The Tennessee Senate has approved a nearly $2 billion tax and refund for businesses, a proposal designed to prevent threats of a potential lawsuit. However, critics warn the so-called solution was rushed without being properly vetted and shrouded in mystery.

FILE - The Tennessee Capitol is seen, Jan. 22, 2024, in Nashville, Tenn. Tennessee’s Republican-controlled Statehouse is once again looking to tweak how books can be removed from school library shelves despite concerns that the latest proposal could result in the Bible being possibly banned. NASHVILLE, Tenn.

That amount has since been tweaked to $1.56 billion in refunds and $393 million in tax breaks, totaling $1.95 billion. At issue are concerns that the state’s franchise tax violates a U.S. Constitution’s Commerce Clause provision, which bans states from passing laws that burden interstate commerce. Furthermore, in 2015, the U.S. Supreme Court struck down Maryland’s tax that the justices ruled had the effect of double-taxing income residents earn in other states.

Yet details about what specific businesses raised the original legal concerns have remained hidden. State leaders have refused to disclose what businesses have requested a refund. The original number of the group of businesses who reached out to lawmakers last fall was originally disclosed at around 80, but on Thursday, Yager mentioned that the law firm represented “hundreds” of individuals.

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